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The Gender Pay Gap: The What, Why and How

Of the many prominent issues within the modern day workplace, none has been debated, scrutinised and condemned more than the difference in earnings between men and women – otherwise known as the gender pay gap. It has evoked strong criticism from campaigners, who are frustrated by the fact that although the gap is appearing to close, disparity still exists.

But does this tell the whole story? Why is there a gap? And what is being done to ensure that although we are on the right track, it is eradicated completely? Read on to find out more…

Has Unequal Pay Always Been an Issue?

Wage inequity can be traced in the US back to the Second World War, where women working in factories and munitions industries were being paid lower rates than men. Despite the War Labor Board urging employers to voluntarily rectify this inequality, private firms declined to do so; this remained the case until 1963, when the government passed the Equal Pay Act.

This made it illegal for companies to pay women lower rates than men for doing the same job, with subsequent amendments over the next 10 years solidifying the law. Indeed, by 1971, more than $26m had been paid in back wages to over 70,000 women.

In the UK, progress was slower though. Following a 1968 strike by Ford workers in Dagenham (an incident later given the silver screen treatment), Westminster created their own Equal Pay Act in 1970 to allay further unrest. The act was not fully implemented until 1975 though, and even then had a limited effect; following several further landmark cases, the act was ultimately repealed and amalgamated (along with other anti-discrimination bills) in 2010 into the new Equality Act.

Yet despite these legislative advancements, things are still not even. Why is this?

The Reason the Gender Pay Gap Exists

Unadjusted Pay Gaps

Before answering this question, it is important to understand that the figures can be presented in different ways. The often-quoted figure in the US – that women earn 76 cents to every dollar a man earns – is representative of the unadjusted (or uncontrolled) gender pay gap, which doesn’t take into account job type or seniority.

By this definition, unadjusted figures are skewed. This is because, simply put, there are more men than women in high-level, highly-paid jobs (the fact that there is a disproportionate lack of women in these positions is as a result of the opportunity gap, not the pay gap, which in this context is a different issue).

Adjusted Pay Gaps

Therefore it is important to dig deeper, the findings of which reveal the adjusted (or controlled) pay gap. This takes into account all the variables such as education, industry, age, location and – most importantly – job title and experience; this makes for a much fairer and more direct comparison.

Yet even when this is adjusted for, women in the US still only earn 95 cents to the dollar, according to careers experts Glassdoor (PayScale, who conducted a similar survey, put the figure at 98 cents, while a Cornell University paper went for 92 cents, suggesting 95 cents is a fair estimate). In the UK, Glassdoor’s research produced a similar outcome, with the unadjusted figure of 77p to the pound increasing to 95p. All of which suggests that, although things are not as uneven as they may first appear, there is still undeniably an imbalance.

Is the Imbalance Because of Discrimination or Other Reasons?

Explaining the remaining 5 cents / pence difference is slightly more difficult. Robert Samuelson in the Washington Post argues that women bear greater responsibilities outside of work, with careers being interrupted to raise children, whereas men carry on their careers unhindered. This is seemingly backed up by statistics from the Pew Research Centre, where nearly 40 per cent of women said they had taken significant time off work at some point in their career to look after family, compared to less than 25 per cent of men.

Sam Bowman of the Adam Smith Institute claims that there isn’t in fact a gender pay gap, but what he terms a “motherhood pay gap”. He believes that the disparity can be closed by encouraging men to handle a more equal share of the child-rearing responsibilities.

But while this is true, there is no escaping that discrimination has a part to play as well. For example, the Cornell research paper highlighted an incident where men and women with similar CVs successfully applied for waiting staff jobs at a top restaurant; although they were all hired, the men were offered salaries that were 50 per cent higher. When it comes to gender attitudes in general, Pew’s survey found that 18 per cent of women felt they had been discriminated against at work due to their gender, compared to 10 per cent of men.

How Can We Eradicate the Gender Pay Gap?

Sometimes it is a case of companies needing to take a firmer grasp of their affairs, according to Glassdoor CEO Robert Hohman. Writing for Fortune, he says that he has never met a C-level executive or manager who feels that a female employee shouldn’t be paid the same as a male employee (provided the levels of experience and performance are the same). “The problem,” he says “is that they assume it’s already happening”.

This is one of the reasons why larger companies in the UK are now required by law to publish their gender pay gap figures. The thinking is that it will enable companies to understand their flaws and set targets to rectify them, although it has attracted criticism from many who claim that it still overlooks the nuances of the adjusted pay gap. Clare Gregory, a senior partner in law firm DLA Piper, has already called on the government to amend the requirements so that it reflects the difference in rates for comparable jobs.

A More “Enlightened” Attitude

It seems the most positive changes are coming from within workforces though. A recent Harris poll in the US found that over two-thirds of employees would not want to work for a company where pay gaps exist in comparable roles. As companies seek to recruit the top talent, they have to accept and understand that millennials want to work for what Hohman calls “enlightened employers” that value equality and pay fairly. PayScale’s survey back this up, with 71 per cent of women and 74 per cent of men saying they would look for a new job within 6 months if the issue wasn’t addressed by their employer – stark reading for businesses that are not prepared to change.

Examples

There have been several high-profile examples of gender pay inequality over the last few years, as well as acknowledgement that certain industries and roles have more of an issue than others. Here are a few of them:

The BBC

The British Broadcasting Corporation (BBC), a supposed bastion of respectability and reliability, has been rocked by several large scandals over the last few years. Despite resistance, it was recently forced by the government to reveal its salary figures, which showed a general disparity between male and female employees. In the case of Huw Edwards and Fiona Bruce for example, who are both newsreaders and both present a similar number of other programmes, Edwards was paid £550,000, while Bruce received £350,000.

The BBC received widespread criticism, with lawyers warning the publicly owned institution that they could face sexual discrimination lawsuits; agents representing many of the female employees on the list are understood to be demanding parity from the under-fire organisation.

Professional Sport Organisations

This is another high profile industry where women are far behind men in terms of salary – Time Magazine claims men are paid on average up to 150 per cent more than women.

In 2007, Wimbledon became the last of the four major tennis tournaments to award equal prize money to men and women, a highly public campaign that was driven by Serena and Venus Williams, two of the game’s top female players. Other sports are yet to see such change though.

The Irish women’s national football team were forced into strike action in 2017 as their treatment by the Football Association of Ireland came to light. This included no match fees, no compensation for loss of earnings in order to play, and even the indignity of having to change in toilets after games. The FAI subsequently agreed to meet the players’ demands, but the wider issue of blatant discrimination became the bigger issue.

Financial Services Firms

Financial services firms are guilty of the widest pay gender gap in the UK, although the findings – published recently in the Financial Times – only takes into account the unadjusted data. This is because the majority of senior, high-paying roles within these companies are held by men.

Instead, the issue is to get more women into these positions. A Treasury review headed by Jayne-Anne Gadhia, the CEO of Virgin Money, found that in a sector of 2m people, only 14 per cent of the top jobs were held by women; she is spearheading an initiative to tackle this trend.

Doctors

Disparity between female and male doctors has been reported on both sides of the Atlantic, with female UK doctors consistently earning a third less than their male counterparts since 2008, while in the US, 2016 earnings for women were around 18 per cent lower.

It is unsure why this is – especially in the UK, where NHS contracts are standardised. The government has commissioned a report into the causes of this pay gap, while in the US analysts claim medicine is experiencing a generational shift of women entering a traditionally male-dominated environment.

The Future Looks Brighter

It is clear from the above examples that there is still a long way to go when it comes to pay equality for men and women – nearly every industry can provide examples of disparity. Elise Gould, an economist and author, claims that the root causes for the imbalance are insidious, with societal and cultural expectations influencing and affecting the career choices of many women.

But, while it has been a long time coming, it seems that the generational attitude shift we are currently experiencing can be the catalyst for change. Companies are now accountable, not just to the government but their own workforce. They can no longer justify the disparity or even claim ignorance – and those that do will find their best talent leaving in droves.

US think tank Fast Company believes that female salaries will not only catch up with their male counterparts by 2020, but even exceed them, claiming that the higher numbers of women graduating will eventually translate into seniority in the workplace. It seems that finally, the tipping point has arrived in this long and controversial battle.

What are your views on the gender pay gap? Share your thoughts and experiences in the comments below…